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(E.G. THE DECISON MAKING PROCESS, RECRUITMENT OF STAFF, LAND RESUMPTIONS, PLANNING DISPUTES, THE CAPACITY OF THE CONSTRUCTION INDUSTRY, AND SO ON), THERE IS A VERY REAL DANGER OF MONEY BEING WASTED IF WE TRY TO SPEND TOO MUCH, TOO QUICKLY.
104. BUT STEADY PROGRESSION IS NOT JUST A MATTER OF FIXING UPON A GROWTH RATE WHICH IS PRACTICABLE. IT ALSO DEPENDS ON THE EXTENT TO WHICH WE ARE ABLE TO INSULATE THE MAMANGEMENT OF THE PUBLIC FINANCES FROM SHORT TERM DEVIATIONS FROM THE TREND GROWTH LINES OF REVENUE AND EXPENDITURE, I SAY THIS BECAUSE SUCH DEVIATIONS SHOULD NOT, IDEALLY, AFFECT THE IMPLEMENTATION OF THE GOVERNMENT'S POLICIES AND PROGRAMMES OR NECESSARILY INVOLVED ADJUSTMENTS TO TAX RATES AND CHARGES. A SUDDEN CHANGE OF PACE - WHICH IS (NEXT WORD
- IS INEVITABLE IN A UNDERLINED) NOT THE SAME THING AS STOP/GO SITUATION IN WHICH THE WORLD TRADING ENVIRONMENT SHIFTS ADVERSELY OR WHEN, PERHAPS THROUGH FAILURE TO EXERCISE PROPER CONTROL OVER EXPENDITURE, A TENDENCY TO PERSISTENT DEFICITS EMERGES. BUT A SHORT LIVED TENDENCY FOR EXPENDITURE TO EXCEED REVENUE OR FOR REVENUE
YIELDS TO FALL BELOW EXPECTATIONS IS BEST DEALT WITH BY AVING AVAILABLE ADEQUATE FISCAL RESERVES.
105. A SECOND ADDITIONAL GUIDELINE, THEREFORE, IS REQUIRED TO DEFINE THE RELATIONSHIP WHICH OUR FISCAL RESERVES SHOULD BEAR TO GENERAL REVENUE ACCOUNT EXPENDITURE, WHICH RELATIONSHIP SHOULD BE MAINTAINED BY ADDING TO THEM OVER TIME. THE QUESTION IS: WHAT SHOULD THAT RELATIONSHIP BE?
106. AT 1ST APRIL 1977 CUR FISCAL RESERVES WILL BE OF THE ORDER OF DOLLARS 3,660 MILLION OR MORE THAN 44% OF ESTIMATED EXPENDITURE. THIS REPRESENTS A SIGNIFICANT IMPROVEMENT ON THE POSITION AT 1ST APRIL 1975 AND 1976, WHEN THE RATIO WAS 38-39%, BUT NOT ALL OF OUR RESERVES MAY BE CONSIDERED AS BEING AVAILABLE TO FINANCE ANNUAL DEFICITS. AT LEAST DOLLARS 2,500 MILLION MUST BE HELD AS ASSETS TO SECURE OUR CONTINGENT LIABILITIES WHICH WILL STAND AT AROUND DOLLARS 4,000 MILLION AT 31ST MARCH 1978 RISING PERHAPS TO BETWEEN DOLLARS 7,500 MILLION AND DOLLARS 8,000 MILLION BY 31ST MARCH 1981.
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